Challenges in Oil & Gas Industry

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Current & Emerging Challenges in Global Oil & Gas Industry Submitted By: ABHISHEK KUMAR ROLL – 02 PGDM - IB Under the Guidance of: Prof. C P JOSHI HOD (Strategy, International Business & General Management) Current & Emerging Challenges in Global Oil & Gas Industry 1. Topic: Current & Emerging Challenges in Global Oil & Gas Industry 2. Objective: This seminar paper aims to briefly analyse the current challenges faced by Global Oil & Gas companies and its impact on the global energy sector 3. Methodology Used This Seminar paper will primarily be based on the secondary research. Newspaper articles, case studies and industry magazines & Journal will largely constitute the seminar paper contents. ABHISHEK KUMAR Roll -02…show more content…
The IEA is calling for an energy supply investment of $ 1 Trillion per year through 2030. The ensuing supply crunch may further raise the oil prices and threaten economic recovery. In recognition to this dilemma, some countries have introduced fiscal incentives to prop up key industry players. Brazil’s national development bank, committed over US $10 Billion to state –controlled oil producer Petrobras. This followed a similar investment by Mexico’s government in its oil producer, Permex, to fund the construction of new refinery. Figure i- Source – World Energy Report 2012 ABHISHEK KUMAR Roll -02 PGDM –IB 2011- 13 Page 3 Current & Emerging Challenges in Global Oil & Gas Industry Figure ii: Source Barclays Capital 4.2 High operating Cost leading to Lesser Profits For oil and gas companies across the supply chain, high commodity prices in recent years translated into more than record profits. They also served to stimulate development of higher cost, unconventional crude and gas resources, which, in turn, pushed up the costs of engineering, procurement, construction, equipment, labour, land and other critical inputs. As a consequence, when price fell precipitously capital was already committed and cost failed to drop as steeply. In response to lower current cash flows and the projected margin squeeze on new investment, companies around the world have begun to delay and cancel projects.3 According to the Canadian Energy Research
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